By Tiernan Ray

Shares of semiconductors are mixed today, with Intel (INTC) trading down by 33 cents, or 1.3%, at $23.90, and Broadcom (BRCM) off 63 cents, or 1.9%, at $33.17, while Texas Instruments (TXN) is up 10 cents at $34.95, and Advanced Micro Devices (AMD) are up a penny at $4.09, following a May chip salesreport by the Semiconductor Industry Association that was better than expected.

SIA yesterday announced the rolling three-month average for sales ending in May was $24.70 billion, a 4.6% rise from April’s level, and a 1.3% year-over-year rise, the prior three-month period.

J.P. Morgan semi analyst Chris Danely focuses on the discrete monthly number, rather than the rolling three-month, which at $24.3 billion, was up 3.4% from April, and “above the average May MoM increase of 3.0% and above our flattish MoM growth estimate due to higher than normal Flash and DRAM sales.” The rise reversed a 1.8% drop in the February to April period.

Danely maintains a view for 6% growth this year in semi revenue, and writes that he favors “semiconductor stocks with the most upside to EPS and margins, which should lead to the most upside to consensus estimates,” including Xilinx (XLNX), Texas Instruments, Analog Devices (ADI), and ON Semiconductor (ONNN).

Wedbush Securities’s Betsy Van Hees notes that the unit shipment total of 58.4 billion rose 4% from April, “above the 5-yr. avg. of flat M/M and up 4% Y/Y below the 5-yr. avg. of up 6% Y/Y.”

The numbers are “encouraging” and support her view that the semi cycle’s recovery continues at a healthy and steady pace”:

We maintain our upbeat view on the overall sector following our semi-annual bus tour on June 11 to 13 and our industry checks that point to the semi industry’s recovery as being fairly broad based and not just a one-quarter head fake. While SIA’s data is backward looking, another month of slightly above seasonal growth supports our view for a healthy and orderly recovery of the overall industry to carry into 2H:13. Although we expect the entire group to benefit from an even paced recovery, we look for BRCM, Cypress Semiconductor (CY), Micron Technology ( MU), Nvidia (NVDA), ONNN, SanDisk (SNDK), and TXN to likely outperform in the 2H of 2013 as we believe these companies are best positioned to benefit from (1) product cycles, (2) secular trends of mobile devices and cloud computing, and (3) operational leverage from improving utilization rates, GM expansion, and tight expense controls.

Wells Fargo’s David Wong reiterates a view for 8% to 10% semi growth this year, writing that the data “lends good support to our view that chip demand continues to recover.”

IC sales grew 6% year over year in May, following a decline of 1% year over year in April with March being flat. IC units increased 6% year over year, following a 9% increase in April, and a 2% rise in March. This implies blended IC average selling price (ASP) was flat yr/yr in May. We think that memory, especially DRAM, could continue to help pricing comparisons as the year progresses, and that the ASP of ICs excluding memory could also firm as demand lifts.

He notes the industry seems to be holding off on capacity expansion:

The ratio of worldwide semiconductor equipment sales to semiconductor IC sales was 14% in May, following 13% in April and 13% in March. We consider these to be low ratios of reinvestment compared to the more typical 15-20% we have seen in recent “normal” years, suggesting that the chip industry is continuing to hold down spending to avoid excess capacity issues. Even so, the North-American semiconductor equipment data showed that the book-to-bill ratio was 1.08 in May, with bookings up 13% month over month. We expect that firming demand through 2013 will result in rising semiconductor equipment orders and shipments, from the trough reached towards the end of 2012. Given that the re- investment ratio is rising from such a low point though, we believe capacity expansion will remain muted through 2013 and we expect capacity utilization will rise as chip demand recovers, resulting in firm chip pricing.

One spoiler is Patrick Wang of Evercore Partners, just back from a tour of Asia, writing that he is “incrementally more bearish on the second half of 2013″:

We believe 2013 will ultimately be 1H-loaded once again. Growth in 3Q appears relatively lackluster and a robust 2H snapback is less likely now. With PCs, smartphones, tablets, consumer, and China showing signs of slowing, it’s hard to see where growth will come from.

The lower-cost iPhone is already ramping and 5S was pushed by a month or so. iPad 5 appears on track for a Fall launch and the iPad mini 2 has been pushed to 1H14 due to supply shortages. Importantly, unlike the sizeable Samsung GS4 cuts recently, we believe Apple’s 2H13 plans have been fairly robust.

But China could be a drag:

No longer a tailwind, it’s clear China is amidst some sort of correction given the combination of (1) push- outs, (2) rising inventories, (3) concerns of double bookings, and (4) signs of softening demand recently. Our contacts now expect a multi-year phase of more moderate growth (mid-SD) but see minimal risk of a recession despite recent liquidity concerns.

And the PC industry is still a very weak spot, he thinks:

Most expect a unit decline of >10% YoY in 2013 as order cuts have accelerated in June. 3Q will remain muted and potential catalysts don’t arrive until 4Q. The new products may miss “back to school” as (1) low priced SKUs ship in Sept, (2) Bay Trail (BT) in Oct, and (3) Win 8.1 in Oct. Our contacts are also more cautious on 2H DRAM trends due to concerns of (1) double orders, (2) weakening PC, and (3) handset inventories.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.